Silly Debt vs. Smart Debt - Cash Out Mortgages Are Quietly On The Rise!

INSIDER NEWS BEFORE THE NEWS

Dumb Debt vs. Smart Debt - Cash Out Mortgages On The Rise

As markets continue to be volatile, we see more people taking advantage of cash-out mortgages. A cash-out mortgage is when you refinance your home for more than you owe on the mortgage and take the difference in cash.

People use this extra cash to invest, pay off other debt, or renovate their homes. With mortgage interest rates still at historically low levels (over the last ten years and compared to credit cards), now is a great time to consider a cash-out mortgage. Credit cards are high, rehab loans are high, and mortgages tend to be the cheapest debt.

There are a few things to remember when considering a cash-out mortgage. First, your monthly payments will likely increase since you borrow more money. You will also need equity in your home to qualify for a cash-out mortgage. However, if you are consolidating debt or avoiding new debt, the overall cash flows may be much lower. Payments and payments and debt is debt. Where is the smarter debt?

Inflation Up - The Issue

Inflation is up, and it's becoming a regular thing. This is "good" for the economy but has some drawbacks.

The main drawback is that inflation erodes the purchasing power of your money. This means that each dollar you have today will buy less in the future. In other words, your money will not go as far.

The other drawback is that inflation can create uncertainty. When prices rise, people don't know how much they should be paying for things. This can make people afraid to spend money because they want to avoid overpaying. Like cars right now. We need them, but wow, are they out of control??

Overall, inflation is good for the economy, but it does have some drawbacks that you should be aware of.

Rates Slightly Down - A Solution

Debt Consolidation

Debt consolidation is combining multiple debts into a single, larger debt. The new consolidated debt will have a lower interest rate than the individual debts, saving you money on interest payments. Additionally, consolidating your debts can help you pay them off more quickly, as you'll only have to make one monthly payment instead of multiple payments.

If you need help keeping up with multiple monthly debt payments, consolidation may be a good option. By consolidating your debts, you can reduce the amount of money you're wasting on interest payments and free up some cash flow to make your monthly payments more efficiently. Additionally, if you have "good" debt, such as debt that is tax-deductible, consolidating can help you lower the overall cost of borrowing money.

To consolidate your debts, you can either take out a personal loan, open a new line of credit, or do a cash-out mortgage. The cast-out mortgage usually offers the lowest rates with the best tax advantages. If you consolidate with a personal loan, you'll receive a lump sum of cash that you'll use to pay off your debts. Once your debts are paid off, you'll make monthly payments on the personal loan. If you consolidate with a new line of credit, you'll be given a credit limit that you can use to pay off your debts. If it is a cash-out mortgage, you can get the cash, or the mortgage process can roll the debt in and pay the debts. Once your debts are paid off, you'll only owe monthly payments on the new debt.

There are pros and cons to all methods of consolidation. Personal loans typically have fixed interest rates, which means your monthly payment will never change. This can make budgeting more manageable and help you know exactly how much money you need to set aside each month to make your payment. However, personal loans typically have higher interest rates than lines of credit and cash-out refinances. Lines of credit usually have lower interest rates than personal loans, but they also typically have variable interest rates. Your monthly payment could go up or down depending on the market interest rate. Typical cash-out loans offer low fixed rates and possible tax benefits, but you may already have a super-low rate, which would be jeopardized.

Before consolidation, it's essential to consider your options and decide what's best for your situation. If you need help determining which type of consolidation is right for you, we can help. We offer free consultations so you can speak with me and what's best for your unique financial situation.

Pay Lower Interest

Debt is a significant problem for many people, but it doesn't have to be. If you're struggling with debt, there are things you can do to get your finances back on track. One of the best things you can do is to consolidate your debt.

Consolidating debt can lower the amount of wasted income at higher rates. You can pay off debt faster with lower rates and have more household cash flow because the interest is less. There is also more intelligent debt, like interest deductible debt, which lowers the cost of money.

Have Better Cash Flows

Debt is a burden that many Americans carry. It can be not easy to keep up with payments, and the high-interest rates can make it feel like you're never getting ahead. If you're struggling with debt, you're not alone. The average U.S. household owes more than $165,000 in debt, according to a new NerdWallet study per Google (here).

You can get a handle on your debt and improve your cash flow. One option is to consolidate your debt. This can help you get a lower interest rate, saving you money over time. You may also get a longer repayment term, which can lower your monthly payments.

If you're struggling with debt, options are available to help you get back on track. Consolidating your debt can be an excellent way to save money and get a handle on your finances.

If you are considering taking a cash-out mortgage, please let me know if it makes sense for your situation (here).